off-the-wire

Bank of England's Pill says BoE must guard against inflation getting stuck at 4-5%

Kitco Media
By Reuters
Published:
Updated:
Reuters

LONDON, May 15 (Reuters) - The Bank of England needs to guard against second-round inflationary effects which could see inflation bottom out at 4% or 5%, rather than return to its 2% target, BoE Chief Economist Huw Pill said on Monday.

"The risk is ... that self-sustaining second-round-effect momentum within the UK economy keeps inflation running at above-target levels for a little bit longer", Pill said in an online presentation.

"That's still compatible with quite a big fall in headline inflation, but maybe headline inflation - other things equal - getting stuck at that 4%, 5% level over the next two or three years," he added.

"It's precisely that that we want to avoid, because if inflation gets stuck at that type of level, it will tend to carry on for a very long time."

Reporting by David Milliken and Muvija M
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